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Better together: Active and passive labor market policies in developed and developing economies

Clemente Pignatti
Clemente Pignatti
 e 
Eva Van Belle
Eva Van Belle
   | 25 lug 2021
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Pubblicato online: 25 lug 2021
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Accettato: 07 feb 2021
DOI: https://doi.org/10.2478/izajodm-2021-0009
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© 2021 Clemente Pignatti et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.

Figure 1

Average spending in ALMPs and PLMPs across regions as a share of GDP.Note: Authors’ calculations based on different data sources as reported in Section 2. ALMPs, active labor market policies; ADB, Asian Development Bank; PLMPs, passive labor market policies.
Average spending in ALMPs and PLMPs across regions as a share of GDP.Note: Authors’ calculations based on different data sources as reported in Section 2. ALMPs, active labor market policies; ADB, Asian Development Bank; PLMPs, passive labor market policies.

Figure 2

Spending in ALMPs and PLMPs over regions and decades as a share of GDP.Note: Authors’ calculations based on different data sources as reported in Section 2. ALMPs, active labor market policies; PLMPs, passive labor market policies.
Spending in ALMPs and PLMPs over regions and decades as a share of GDP.Note: Authors’ calculations based on different data sources as reported in Section 2. ALMPs, active labor market policies; PLMPs, passive labor market policies.

Figure 3

The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs. (a) Unemployment rate. (b) Employment rate.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. ALMPs, active labor market policies; PLMPs, passive labor market policies.
The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs. (a) Unemployment rate. (b) Employment rate.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. ALMPs, active labor market policies; PLMPs, passive labor market policies.

Figure 4

The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs in developed economies.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. ALMPs, active labor market policies; PLMPs, passive labor market policies.
The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs in developed economies.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. ALMPs, active labor market policies; PLMPs, passive labor market policies.

Figure 5

The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs in emerging and developing economies.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. The two lines in Panel B almost perfectly overlap. ALMPs, active labor market policies; PLMPs, passive labor market policies.
The effect of one additional unit spending on ALMPs (PLMPs) given spending on PLMPs in emerging and developing economies.Note: The presented statistics are coefficient estimates for the panel mode outlined in Section 5. The two lines in Panel B almost perfectly overlap. ALMPs, active labor market policies; PLMPs, passive labor market policies.

Results for the unemployment rate, employment-to-population ratio, and labor force participation rate estimated with OLS

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) −0.036*** (0.005) −0.013** (0.006) 0.054*** (0.008) 0.020** (0.009) 0.035*** (0.006) 0.012 (0.008)
Spending in PLMPs (% GDP) 0.032*** (0.003) 0.049*** (0.005) −0.029*** (0.004) −0.054*** (0.005) −0.012*** (0.003) −0.029*** (0.004)
Interaction −0.020*** (0.004) 0.030*** (0.005) 0.021*** (0.004)
Constant 0.058*** (0.004) 0.044*** (0.005) 0.540*** (0.005) 0.561*** (0.006) 0.574*** (0.004) 0.588*** (0.005)
Controls No No No No No No
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 932 932 932 932 932 932

Results of the first-stage equation

(1) (2) (3)
Spending in ALMPs Spending in PLMPs Interaction
Eurostat −0.293*** (0.027) −0.325*** (0.052) −0.398*** (0.040)
ADB −0.216*** (0.046) −0.186** (0.079) 0.191** (0.096)
ASPIRE 0.413 (0.081) 1.101*** (0.159) 1.544*** (0.211)
F statistic 11.29 17.36 49.01
Observations 932 932 932

Results for the unemployment rate, employment-to-population ratio, and labor force participation rate estimated with 2SLS

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) 0.015 (0.047) −0.035 (0.045) 0.221** (0.093) 0.412** (0.181) 0.230** (0.091) 0.407** (0.180)
Spending in PLMPs (% GDP) 0.018 (0.025) 0.092*** (0.035) −0.158*** (0.052) −0.444*** (0.127) −0.149*** (0.051) −0.413*** (0.126)
Interaction −0.044** (0.018) 0.170*** (0.053) 0.157*** (0.051)
Constant 0.040*** (0.008) 0.031*** (0.009) 0.581*** (0.016) 0.613*** (0.024) 0.605*** (0.014) 0.635*** (0.023)
Controls No No No No No No
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 932 932 932 932 932 932

Results for the heterogeneity analysis by development status estimated using 2SLS

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) 0.105** (0.041) 0.136*** (0.042) 0.097 (0.065) 0.216** (0.108) 0.175** (0.072) 0.276** (0.124)
Spending in PLMPs (% GDP) −0.036 (0.023) −0.001 (0.030) −0.093** (0.043) −0.301*** (0.087) −0.127*** (0.046) −0.319*** (0.096)
Interaction −0.024 (0.020) 0.137*** (0.039) 0.133*** (0.043)
Spending in ALMPs x Developing −0.072 (0.046) −0.041 (0.045) −0.214*** (0.071) −0.408*** (0.118) −0.278*** (0.079) −0.437*** (0.136)
Spending in PLMPs x Developing 0.159*** (0.035) 0.243*** (0.053) −0.031 (0.051) 0.106 (0.107) 0.054 (0.052) 0.214* (0.116)
Interaction x Developing −0.631*** (0.186) 0.264 (0.193) 0.026 (0.156)
Constant 0.046*** (0.008) 0.046 (0.031) 0.648*** (0.068) 0.678*** (0.105) 0.722*** (0.074) 0.741*** (0.114)
Controls No No No No No No
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 932 932 932 932 932 932

Data availability on spending in active and passive labor market policies

Country Time period covered Source Country Time period covered Source Country Time period covered Source
Afghanistan 2008–2010 ADB Greece 1985–2010/2013–2015 OECD Panama 2007–2014 ASPIRE
Albania 2000–2013 ASPIRE Guatemala 2004–2013 ASPIRE Papua New Guinea 2008–2015 ADB
Argentina 2000–2015 ASPIRE Honduras 2003–2014 ASPIRE Peru 2000–2015 ASPIRE
Armenia 2008–2015 ADB Hungary 1992–2016 OECD Philippines 2008–2015 ADB
Australia 1985–2016 OECD India 2008–2013 ADB Poland 1991–2016 OECD
Austria 1985–2016 OECD Indonesia 2009–2014 ADB Portugal 1985–2016 OECD
Azerbaijan 2008–2015 ADB Ireland 1985–2016 OECD Romania 2005–2016 Eurostat
Bangladesh 2008–2015 ADB Israel 2004–2016 OECD Rwanda 2004–2011/2014–2015 ASPIRE
Belgium 1985–2016 OECD Italy 1990–2016 OECD Saint Lucia 2000–2013 ASPIRE
Benin 2005–2014 ASPIRE Japan 1985–2016 OECD Sao Tome and Principe 2013–2014 ASPIRE
Bhutan 2011–2015 ADB Kazakhstan 2005–2014 ASPIRE Senegal 2005–2015 ASPIRE
Bolivia 2008–2015 ASPIRE Kenya 2005–2016 ASPIRE Serbia 2000–2013 ASPIRE
Botswana 2004–2010 ASPIRE Korea 2000–2016 OECD Sierra Leone 2010–2011 ASPIRE
Brazil 2000–2015 ASPIRE Kyrgyzstan 2008–2015 ADB Slovak Republic 1991–2016 OECD
Bulgaria 2004–2016 Eurostat Laos 2008–2015 ADB Slovenia 2003–2016 OECD
Burkina Faso 2005–2016 ASPIRE Latvia 2003–2016 OECD Solomon Islands 2008–2015 ADB
Burundi 2010–2013 ASPIRE Lebanon 2009–2010 ASPIRE South Africa 2009–2012 ASPIRE
Cambodia 2008–2015 ADB Liberia 2008–2014 ASPIRE South Sudan 2011–2012 ASPIRE
Cameroon 2011–2017 ASPIRE Lithuania 2003–2016 OECD Spain 1985–2015 OECD
Canada 1985–2016 OECD Luxemburg 1985–2016 OECD Sri Lanka 2008–2015 ADB
Central African Republic 2009–2010/2014–2015 ASPIRE Macedonia 2000–2014 ASPIRE Swaziland 2006–2010 ASPIRE
Chile 2004–2016 OECD Malawi 2008–2016 ASPIRE Sweden 1985–2016 OECD
China 2008–2015 ADB Malaysia 2008–2013 ADB Switzerland 1985–2016 OECD
Colombia 2000–2015 ASPIRE Maldives 2008–2011 ADB Tajikistan 2008–2015 ADB
Congo 2014–2016 ASPIRE Mali 2011–2016 ASPIRE Tanzania 2014–2016 ASPIRE
Costa Rica 2007–2012 ASPIRE Malta 2006–2016 Eurostat Thailand 2008–2015 ADB
Croatia 2012–2016 Eurostat Mauritius 2005–2009 ASPIRE Timor-Leste 2008–2014 ADB
Cyprus 2006–2016 Eurostat Mexico 1998–2016 OECD Togo 2011–2012 ASPIRE
Czech Republic 1991–2016 OECD Moldova 2000–2014 ASPIRE Tunisia 2000–2013 ASPIRE
Denmark 1986–2016 OECD Mongolia 2008–2015 ADB Turkey 2005–2013 ASPIRE
Djibouti 2014–2015 ASPIRE Montenegro 2000–2013 ASPIRE Uganda 2009–2016 ASPIRE
Dominican Republic 2010–2012 ASPIRE Morocco 2007–2014 ASPIRE United Kingdom 1985–2011 OECD
Ecuador 2000–2011 ASPIRE Mozambique 2012–2015 ASPIRE United States 1985–2016 OECD
El Salvador 2009–2014 ASPIRE Nepal 2008–2015 ADB Uruguay 2000–2015 ASPIRE
Estonia 2003–2016 OECD Netherlands 1985–2016 OECD Uzbekistan 2009–2015 ADB
Ethiopia 2009–2016 ASPIRE New Zealand 1985–2016 OECD Vanuatu 2008–2015 ADB
Fiji 2008–2015 ADB Nicaragua 2000–2013 ASPIRE Viet Nam 2008–2015 ADB
Finland 1985–2016 OECD Niger 2004–2017 ASPIRE Zambia 2014–2016 ASPIRE
France 1985–2015 OECD Nigeria 2009–2012 ASPIRE Zimbabwe 2010–2015 ASPIRE
Germany 1985–2016 OECD Norway 1985–2016 OECD
Ghana 2010–2016 ASPIRE Pakistan 2008–2015 ADB

Descriptive statistics (2010)

Overall Emerging and developing economies Developed economies
N Mean N Mean N Mean
A. Outcome variables
Unemployment rate 121 0.080 85 0.076 36 0.090
Employment rate 121 0.584 85 0.599 36 0.548
Labor force participation rate 121 0.633 85 0.646 36 0.601
B. Main regressors
Spending in ALMPs (% GDP) 104 0.4832737 190 0.1215296 613 0.5953967
Spending in PLMPs (% GDP) 803 0.8125800 190 0.1605833 613 0.943
C. Control variables
Primary balance 120 −1.801 84 −1.055 36 −3.544
GDP growth gap 121 0.034 85 0.046 36 0.005
Share in low-skill employment 121 0.149 85 0.170 36 0.100
Share in medium-skill employment 121 0.628 85 0.680 36 0.505
Share in high-skill employment 121 0.223 85 0.151 36 0.395

Results for the robustness test including additional controls

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) −0.022 (0.073) −0.070 (0.078) 0.337* (0.180) 0.558 (0.342) 0.323* (0.172) 0.531 (0.331)
Spending in PLMPs (% GDP) 0.037 (0.035) 0.121** (0.050) −0.196** (0.090) −0.587*** (0.199) −0.173** (0.086) −0.540*** (0.191)
Interaction −0.049* (0.026) 0.226*** (0.078) 0.212*** (0.073)
Constant −0.022 (0.073) −0.070 (0.078) 0.337* (0.180) 0.558 (0.342) 0.323* (0.172) 0.531 (0.331)
Controls Yes Yes Yes Yes Yes Yes
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 871 871 871 871 871 871

Results for the robustness test excluding the crisis years

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) 0.071 (0.083) 0.050 (0.068) 0.206 (0.138) 0.539 (0.386) 0.240* (0.132) 0.587 (0.395)
Spending in PLMPs (% GDP) 0.004 (0.036) 0.025 (0.055) −0.117** (0.059) −0.442* (0.252) −0.112* (0.057) −0.450* (0.257)
Interaction −0.010 (0.030) 0.156* (0.093) 0.162* (0.095)
Constant 0.006 (0.018) 0.007 (0.016) 0.550*** (0.031) 0.537*** (0.056) 0.554*** (0.029) 0.541*** (0.057)
Controls No No No No No No
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 576 576 576 576 576 576

Results for the robustness test using the lagged value of spending as an instrument

(1) (2) (3) (4) (5) (6)
Unemployment rate Employment rate Labor force participation rate
Spending in ALMPs (% GDP) −0.016** (0.008) 0.033*** (0.010) 0.011 (0.008) −0.026*** (0.010) 0.003 (0.005) −0.006 (0.006)
Spending in PLMPs (% GDP) 0.044*** (0.005) 0.085*** (0.007) −0.028*** (0.004) −0.059*** (0.006) −0.002 (0.003) −0.010** (0.005)
Interaction −0.037*** (0.005) 0.028*** (0.005) 0.007** (0.003)
Constant 0.131*** (0.022) 0.077*** (0.024) 0.621*** (0.024) 0.663*** (0.026) 0.703*** (0.019) 0.714*** (0.020)
Controls No No No No No No
Country trend Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Observations 803 803 803 803 803 803
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